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Virginia Economic Roundup: Transportation Changes Take Effect

Virginia’s transportation funding bill went into effect Monday with the elimination of the 17.5-cents-per-gallon gas tax and the increase in the wholesale sales tax on gasoline.

The American Automobile Association (AAA) predicts that gas prices will drop 6 cents per gallon in parts of Virginia. The sales tax across the state increased from 5 percent to 5.3 percent, with an extra 1 percent added on for car purchases and a registration fee of $64 per year on alternative-fuel and hybrid vehicles.

Residents of Northern Virginia and Hampton Roads saw a higher sales-tax increase than the rest of the state, with taxes rising to 6 percent.

The changes are expected to add more than $4 billion to Virginia’s transportation plan over the next six years.

Fort Eustis Will Lose 333 Positions

Fort Eustis in Newport News will lose 333 positions, nearly 8 percent of its military workforce, as the result of downsizing taking place throughout the U.S. Army.

Fort Eustis will lose the positions as the 7th Sustainment Brigade transforms into the 7th Transportation Brigade, part of a longtime plan to reduce the size of the Army by 80,000 soldiers by 2017. That number accounts for 14 percent of the active-duty military.

Under the restructuring plan, the Army will add another battalion of between 600 and 800 soldiers while cutting in other areas. Army leaders have said they will cut a dozen active-duty combat brigades, leaving the service with 33.

Army leaders have known about the cuts for more than a year and have been working on how to manage the reduction.

Sequester Cuts Into Tax Payments

The government sequester had a negative impact on Payments in Lieu of Taxes (PILT) for many Virginia localities.

PILTs are payments from the U.S. Department of the Interior to localities to offset losses in property taxes because a locality has non-taxable land. The payments are calculated based on how many acres of federal land are inside the locality’s boundaries.

According to The Daily Progress in Charlottesville, several Central Virginia localities received PILTs that were smaller than previous years because of sequestration. Madison County administrator Ernie Hoch said that he was alerted to the effects the sequester would have on payments in March, giving him time to plan for effects on his county’s budget.

The RFI, issued by the Office of Transportation Public-Private Partnerships, the Virginia Department of Transportation (VDOT) and the Department of Rail and Public Transportation, pertains to a 25-mile stretch of I-66 from Route 15 in Prince William County to Interstate 495 in Fairfax County. Information from the RFI could result in formal procurement of a contract.

I-66 improvements are currently in the environmental review process. The following concepts have advanced past the Tier 1 Draft Environmental Impact Statement for further consideration:

Widening I-66 by building additional non-toll general purpose lanes

Converting the existing high-occupancy vehicle (HOV) lane into a one- or two-lane (in each direction) road that would be free to carpoolers, buses and emergency vehicles

Locate Bus Rapid Transit in the median of I-66 extending west from Vienna to Haymarket

The Commonwealth also said in a statement that it welcomes additional improvement concepts for other transportation improvements.

D.C. Metro Still a ‘Tenants’ Market’

Commercial real estate services firm CBRE said in its quarterly report that the Washington, D.C., area remains a “tenants’ market” with limited leasing activity and rising vacancies.

Office leasing throughout the Washington area is relatively unchanged from the first quarter of 2013, but down 25 percent from the second quarter of 2012. While employment remains stable, the push toward workplace efficiencies leads to fewer square feet per office worker and lower net demand for office space.

CBRE noted that the Northern Virginia office market, the vacancy rate increased to 16.2 percent, more than the previous high of 16 percent from 2002. The firm said that percentage is driven largely by tenant moves and consolidations and that smaller tenants, many new to the market, are moving in.